2018 TRONC, INC. ALL RIGHTS RESERVED

Transcription

1 2018 TRONC, INC. ALL RIGHTS RESERVED

2 Disclaimer The statements contained in this presentation include certain forward-looking statements that are based largely on the current expectations of tronc, Inc. and reflect various estimates and assumptions by us. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in such forward-looking statements. Such risks, trends and uncertainties, which in some instances are beyond our control, are described under the heading Risk Factors in tronc s filings with the Securities and Exchange Commission (SEC), which are available on the SEC s website or at investor.tronc.com, and include, without limitation: q q q q q q q changes in advertising demand, circulation levels and audience shares; competition and other economic conditions; our ability to develop and grow our online businesses; changes in newsprint price; our ability to maintain effective internal control over financial reporting; concentration of stock ownership among our principal stockholders whose interests may differ from those of other stockholders; and other events beyond our control that may result in unexpected adverse operating results. The words may, believe, anticipate, expect, project, intend, plan, projections, will, continue, business outlook, outlook, estimate and similar expressions generally identify forward-looking statements. Whether or not any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond our control. You are cautioned not to place undue reliance on such forward-looking statements, which are being made as of the date of this presentation. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. 2 / 2018 TRONC, INC. ALL RIGHTS RESERVED

3 Transforming Legacy Brands to become a Modern Media Company 3 / 2018 TRONC, INC. ALL RIGHTS RESERVED

4 Company Overview tronc (tribune online content) is a media company rooted in award-winning journalism with brands that create and distribute content across the company s media portfolio, offering integrated marketing, media, and business services to consumers and advertisers, including digital solutions and advertising opportunities. CORPORATE INFORMATION q NASDAQ: TRNC q Headquartered in Chicago, IL q Newsrooms in ten markets including the top three Designated Market Areas 1 (DMA). Titles include: o Chicago Tribune o Los Angeles Times o New York Daily News o The Baltimore Sun o Orlando Sentinel o South Florida's Sun-Sentinel o Virginia s Daily Press o Allentown - The Morning Call o Hartford Courant o The San Diego Union-Tribune AWARD WINNING JOURNALISM q 105 Pulitzer Prizes 1 Based on Nielsen s DMA rankings REPORTING SEGMENTS troncm q Comprised of the Company s media groups excluding their digital revenues and related digital expenses, except digital subscription revenues when bundled with a print subscription. troncx q Includes the Company s digital revenues and related digital expenses from local tronc websites, third party websites, mobile applications, digital only subscriptions, TCA and forsalebyowner.com. FINANCIAL OVERVIEW (trailing 12 months at the end of Q3 17) q Revenue - $1.51 billion q GAAP net income - $25.3 million q Non-GAAP adjusted EBITDA - $180.2 million * Please refer to the defini1on of Adjusted EBITDA and the reconcilia1on of GAAP to Non-GAAP in the appendix 4 / 2018 TRONC, INC. ALL RIGHTS RESERVED

5 Strong Market Position in Large and Diverse Regions (10 markets, including the top 3 DMAs*6) DAILY NEWS #30 DMA #1 DMA *3 Average Circulation 124k Unique Visitors 1.3M Average Circulation 303k Unique Visitors 26.7M *5 #3 DMA #2 DMA Average Circulation 763k Unique Visitors 19.1M Average Circulation 718k Unique Visitors 33.1M #4 (#55) DMA *4 Average Circulation 98k Unique Visitors 1.1M #26 DMA Average Circulation 237k Unique Visitors 4.2M #42 DMA Average Circulation 78k Unique Visitors 0.6M #28 DMA Average Circulation 207k Unique Visitors 3.7M tronc Q3 17 Average Circulation 2.8M*1 Q3 17 Unique Visitors 81.3M*2 #18 DMA Average Circulation 154k Unique Visitors 4.7M Notes *1 Average Circulation: Q3, 2017 AAM Sunday *2 Unique Visitors: comscore Q3, 2017 Quarterly Average Unique Visitors (unduplicated) *3 Chicago Tribune paid print circulation also includes Chicago Suburban *4 The Baltimore Sun paid print circulation also includes Capital Gazette and Carroll County Times *5 The Morning Call focuses on the Lehigh Valley region within the 4th largest DMA (Philadelphia) *6 Based on Nielsen s DMA rankings 5 / 2018 TRONC, INC. ALL RIGHTS RESERVED #16 DMA Average Circulation 161k Unique Visitors 3.7M

6 Investment Thesis Ø Strong local brands Ø National expansion in select verticals Ø Investment in talent, distribution and content Ø Leverage balance sheet to grow Ø Aggressively manage operations for efficiency Ø Investing to accelerate our transformation Ø Working to create a framework for long-term value creation that accelerates digital and extends print 6 / 2018 TRONC, INC. ALL RIGHTS RESERVED

7 The Path Forward - tronc THE MODERN MEDIA COMPANY Delivering trusted and compelling experiences to local audiences in targeted and personalized ways Leveraging our combined reach and delivering IP across all screens that leading brands will want to spend against and users will want to pay for in markets where tronc is advantaged 7 7 / 2018 TRONC, INC. ALL RIGHTS RESERVED

8 This direction sets our priorities Delivering compelling experiences To local audiences in targeted ways Across all screens That leading brands and users will want to pay for In markets where tronc is advantaged Prioritize Industry-leading content in core verticals Interactive experiences Personalized and connected experience Voice and Video Broadcast-level reach and frequency Data: Customer relationship management Social platform distribution Investment in platforms to optimize experience Invest in mobile experiences Content everywhere and portability across all screens One or more privileged mobile relationships Personalized experiences Sponsorships of proprietary events and content Affluent audience-targeting Content marketing, lead generation and ecommerce Subscription revenue Focus on the 10 o/o markets Accelerated investments in opportunistic ways Partnerships with key distribution partners/platforms 8 / 2018 TRONC, INC. ALL RIGHTS RESERVED

9 Transforming the core: Content creation Gravitas with Scale Gravitas The Newsroom Editorial teams creating brand defining work in distinctive areas Current model across all areas of content Scale TCA/T10/Premium Partnerships Expert Contributors Curation of TCA, T10, premium partner content Select experts with followers with selfdistribution/promotion capabilities Over time, emphasis shifts to more audiencetargeted, self distributed and cost-effective models All content fed back into TCA and to other T10 properties for further distribution and monetization The Network LAFoodie.com GoBruins.com SiliconBeach.com Network of deep micro-niche vertical entrepreneurs and their audiences 9 / 2018 TRONC, INC. ALL RIGHTS RESERVED

10 Transforming the core: Redefine News Redefine of content from news/editorial to multi-media as a 360 degree experience Events Core - mobile app Core - mobile web/ desktop Video Consumer Core - print The combination of multi-media text, video, graphics/visuals, tweets, events/experiential and more - and the delivery experience across platforms - a 360 degree experience for consumers and advertisers InteracGves Distributed - e.g., Facebook Long term planning cycle, in addition to minute to minute news cycles Consumer as the central focus Visuals Text Galleries 10 / 2018 TRONC, INC. ALL RIGHTS RESERVED

11 Transforming tronc from legacy brands with a digital division, to a Modern Media Company combining GRAVITAS and SCALE across all platforms Content Commerce Financial Acquisitions Culture Ø Leverage our brands to deliver premium, trusted content to our audience across all channels = GRAVITAS Ø Integrate contextual content and commerce across all platforms Ø Open new channels of revenue, data and engagement Ø Maximize efficiencies across tronc Ø Leverage footprint to drive local and national opportunities Ø Meet annual financial goals: Revenue Adjusted EBITDA 1 Ø Identify acquisitions that complement our existing portfolio and diversify our offerings Ø Drive performance through attracting, engaging, cultivating, and inspiring our people DESIRED OUTCOME High-performing, audience-centric, culture that delivers sustainable revenue growth and profit while increasing shareholder value 1 Adjusted EBITDA is a non-gaap measure. Please refer to the definition of Adjusted EBITDA and the reconciliation of GAAP to Non-GAAP in the appendix 11 / 2018 TRONC, INC. ALL RIGHTS RESERVED

12 Goal: Superior tactical execution Aim to create value through focus and superior, consistent day to day tactical execution. a. Revenue Growth i. Go to market strategy and direct sales strategy and execution ii. Programmatic revenue strategy and implementation b. Consumer Experiences i. Superior consumer-centric product experiences ii. Focus on mobile iii. Innovative and integrated subscription/membership offerings c. Strategic Partnerships and Expansion i. Premium content Commitment to strategic direction, new/additional capabilities/talent, and cultural shift to work as one integrated cross-functional team ii. Distribution d. Data Capabilities and Integration i. Consumer experiences ii. iii. Advertising All aspects of operations 12 / 2018 TRONC, INC. ALL RIGHTS RESERVED

13 13 / 2018 TRONC, INC. ALL RIGHTS RESERVED FINANCIAL OVERVIEW

14 Digital strategy and trends Key Highlights DIGITAL ONLY SUBSCRIBERS (000 s) * Focus Areas Market to our Audience Leverage our legacy distribution Build, buy and syndicate content Other Highlights Video creation Launch of data intelligence tool Solidify the sales infrastructure Technology infrastructure enhancements Back office enhancements Q3, 2015 Q4, 2015 Q1, 2016 Q2, 2016 Q3, 2016 Q4, 2016 Q1, 2017 Q2, 2017 Q3, 2017 * Does not includes the impact from the New York Daily News UNIQUE VISITORS (in millions) 2 81 ** / 2017 TRONC, INC. ALL RIGHTS RESERVED Q3, 2015 Q4, 2015 Q1, 2016 Q2, 2016 Q3, 2016 Q4, 2016 Q1, 2017 Q2, 2017 Q3, 2017 ** Includes the New York Daily News 1 Digital Only Subscribers: Balance as of Quarter End 2 Unique Visitors: comscore Quarterly Average (unduplicated)

15 Consolidated financials ($ s in millions) Highlights YTD (as of Q3 2017) REVENUE $1,089 $1,181 Ø Total Consolidated Revenue was down 7.8% YTD 2017 vs. YTD 2016 YTD, 2017 YTD, 2016 NET INCOME Adj EBITDA 1 GAAP Ø Adjusted EBITDA (AEBITDA) 1 was flat YTD 2017 vs. YTD 2016 Ø AEBITDA 1 margin improved 80 basis (BP) YTD 2017 vs. YTD 2016 NON-GAAP $5.9 $(12.9) YTD, 2017 YTD, 2016 $113.4 $113.7 YTD, 2017 YTD, Adjusted EBITDA (AEBITDA) and AEBITDA margin non-gaap measures. Please refer to the definition of Adjusted EBITDA and the reconciliation of GAAP to Non-GAAP in the appendix 15 / 2018 TRONC, INC. ALL RIGHTS RESERVED

16 Balance sheet ($ s in millions) $185 Cash $198 S-T portion L-T Debt Debt $362 $22 $371 $22 $390 $115 $22 Pension and post-retirement benefits payable $102 $109 $41 L-T Debt $341 $349 $368 Q Q Q Q Q Q Q Q Q Working Capital Net Debt 1 (Total Debt Cash) Highlights Strengthened Balance Sheet $139 $159 $349 Increased flexibility to execute key strategies o $11M increase in Cash and a $9M increase in Working Capital in Q3 17 vs. Q2 17 $177 $172 Reduction in Net Debt [Debt Cash] o $11M in Q3 17 vs. Q2 17 o The increase in pension and post-retirement benefits payable mainly driven by the acquisition of the New $(1) York Daily News on September 3, 2017 Q Q Q Q Q Q / 2018 TRONC, INC. ALL RIGHTS RESERVED 1 Net Debt is a non-gaap measure and is defined as Debt ($362M in Q3, 2017, $371M in Q4, 2016 and $390M in Q4, 2015) less Cash ($185M in Q3, 2017, $198M in Q4, 2016 and $41M in Q4, 2015). Please refer to the discussion of Net Debt and its total reconciliation to Total Debt in the appendix.

17 Segment financials ($ s in millions) REVENUE Other YTD (as of Q3 2017) YTD (as of Q3 2017) Circulation Advertising $148 $363 $161 $357 $411 $493 REVENUE Content Advertising $33 $30 $138 $146 YTD, 2017 YTD, 2016 YTD, 2017 YTD, 2016 YTD (as of Q3 2017) YTD (as of Q3 2017) NON-GAAP Adj EBITDA 1 $92 $95 NON-GAAP Adj EBITDA 1 $32 $29 YTD, 2017 YTD, 2016 YTD, 2017 YTD, Adjusted EBITDA (AEBITDA) is a non-gaap measure. Please refer to the definition of Adjusted EBITDA and the reconciliation of GAAP to Non-GAAP in the appendix 17 / 2018 TRONC, INC. ALL RIGHTS RESERVED

18 What to look for: 2018 Ø Investing in growth (verticals, commerce, distribution) Ø Adjacent diversification Ø Investment in partnerships Ø Operating leverage Ø Revenue diversification (subscription, commerce, syndication, distribution) Ø Investment in technology to create leverage and efficiency 18 / 2018 TRONC, INC. ALL RIGHTS RESERVED

19 19 / 2018 TRONC, INC. ALL RIGHTS RESERVED QUESTIONS AND ANSWERS

20 20 / 2018 TRONC, INC. ALL RIGHTS RESERVED APPENDIX

21 Appendix non-gaap This presentation includes references to Adjusted EBITDA (also referred to as Adj EBITDA or AEBITDA ), Adjusted EBITDA margin and Net Debt. These measures are not presented in accordance with generally accepted accounting principles in the United States (US GAAP), and tronc s use of these terms may vary from that of others in the Company s industry. These measures should not be considered as an alternative to net income (loss), income from operations, net income (loss) per diluted share, revenues or any other performance measures derived in accordance with US GAAP as measures of operating performance or liquidity. Adjusted EBITDA (AEBITDA) and AEBITDA margin The Company defines Adjusted EBITDA as net income before equity in earnings of unconsolidated affiliates, income taxes, loss on early debt extinguishment, interest expense, other (expense) income, realized gain (loss) on investments, reorganization items, depreciation and amortization, net income attributable to non-controlling interests, and other items that the Company does not consider in the evaluation of ongoing operating performance. These items include stock-based compensation expense, restructuring charges, transaction expenses, premium on stock buyback and certain other charges and gains that the Company does not believe reflects the underlying business performance (including spin-related costs). AEBITDA Margin is defined as Adjusted EBITDA divided by Revenue. Management believes that because Adjusted EBITDA excludes (i) certain non-cash expenses (such as depreciation, amortization, stock-based compensation, and gain/loss on equity investments) and (ii) expenses that are not reflective of the Company s core operating results over time (such as restructuring costs, including the employee voluntary separation program and gain/losses on employee benefit plan terminations, litigation or dispute settlement charges or gains, premiums on stock buyback, and transaction-related costs), this measure provides investors with additional useful information to measure the Company s financial performance, particularly with respect to changes in performance from period to period. The Company's management uses Adjusted EBITDA (a) as a measure of operating performance; (b) for planning and forecasting in future periods; and (c) in communications with the Company s Board of Directors concerning the Company s financial performance. In addition, Adjusted EBITDA, or a similarly calculated measure, is used as the basis for certain financial maintenance covenants that the Company is subject to in connection with certain credit facilities. Since not all companies use identical calculations, the Company's presentation of Adjusted EBITDA and AEBITDA Margin may not be comparable to other similarly titled measures of other companies and should not be used by investors as a substitute or alternative to net income or any measure of financial performance calculated and presented in accordance with GAAP. Instead, management believes Adjusted EBITDA and AEBITDA Margin should be used to supplement the Company s financial measures derived in accordance with GAAP to provide a more complete understanding of the trends affecting the business. Although Adjusted EBITDA is frequently used by investors and securities analysts in their evaluations of companies, Adjusted EBITDA has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for, or more meaningful than, amounts determined in accordance with GAAP. Some of the limitations to using non-gaap measures as an analytical tool are: they do not reflect the Company s interest income and expense, or the requirements necessary to service interest or principal payments on the Company s debt; they do not reflect future requirements for capital expenditures or contractual commitments; and although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and non-gaap measures do not reflect any cash requirements for such replacements. The Company does not provide a reconciliation of Adjusted EBITDA guidance due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including adjustments that could be made for restructuring and transaction costs, stock-based compensation amounts and other charges reflected in our reconciliation of historic numbers, the amount of which, based on historical experience, could be significant. Net Debt Net Debt is defined as Total Debt less Cash. The Company s management believes that the presentation of Net Debt provides useful information to investors as management reviews Net Debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage. Adjusted Total Operating Expenses Adjusted total operating expenses consist of total operating expenses per the income statement, adjusted to exclude the impact of items listed in the Adjusted EBITDA non-gaap reconciliation. Management believes that Adjusted total operating expenses is informative to investors as it enhances the investors' overall understanding of the financial performance of the Company's business as they analyze current results compared to prior periods. 21 / 2018 TRONC, INC. ALL RIGHTS RESERVED

22 Reconciliation of net Income (loss) to adjusted EBITDA (AEBITDA) and AEBITDA margin ($ s in millions) ReconciliaGon of Net Income (loss) to Adjusted EBITDA and AEBITDA Margin: Three months ended Nine months ended September 24, 2017 September 25, 2016 % Change September 24, 2017 September 25, 2016 % Change Net income (loss) $ 2.1 $ (10.5) * $ 5.9 $ (12.9) * Income tax expense % * Interest expense, net % % Premium on stock buy- back - - * * Loss (gain) on equity investments (5.0) 0.2 * (3.7) 0.5 * Reorganiza=on items, net * * Income from operagons * * Deprecia=on and amor=za=on % % Restructuring and transac=on costs (1) % % Stock-based compensa=on % % Employee voluntary separa=on program * % Adjusted EBITDA $ 35.3 $ % $ $ % Revenue $ $ $ 1,089.0 $ 1,181.0 Net Income (Loss) Margin 0.6% -2.8% 0.5% -1.1% AEBITDA Margin 10.0% 9.7% 10.4% 9.6% * Represents posi=ve or nega=ve change in excess of 100% (1) - Restructuring and transac=on costs include costs related to tronc s internal restructuring, such as severance and IT outsourcing efforts, charges associated with the vacated space and costs related to completed and poten=al acquisi=ons. 22 / 2018 TRONC, INC. ALL RIGHTS RESERVED

23 Reconciliation of net Income (loss) to adjusted EBITDA (AEBITDA) ($ s in millions) Three months ended December 25, 2016 March 26, 2017 June 25, 2017 September 24, 2017 LTM Net Income (loss) $ 19.4 $ -3.0 $ 6.8 $ 2.1 $ 25.3 Income tax expense Interest expense, net Premium on stock buy- back Loss on equity investments, net (5.0) -3.5 Reorganiza=on items, net Income from operagons Deprecia=on and amor=za=on Restructuring and transac=on costs (1) Stock-based compensa=on Employee voluntary separa=on program Adjusted EBITDA $ 66.8 $ 34.1 $ 44.0 $ 35.3 $ (1) - Restructuring and transac=on costs include costs related to tronc s internal restructuring, such as severance and IT outsourcing efforts, charges associated with the vacated space and costs related to completed and poten=al acquisi=ons. 23 / 2018 TRONC, INC. ALL RIGHTS RESERVED

24 Reconciliation of total operating expenses to adjusted total operating expenses ($ s in millions) ReconciliaGon of Total OperaGng Expenses to Adjusted Total OperaGng Expenses: Three Months Ended September 24, 2017 Three Months Ended September 25, 2016 GAAP Adjustments Adjusted GAAP Adjustments Adjusted Compensa=on $ $ (11.1) $ $ $ (8.0) $ Newsprint and ink $ 20.9 $ - $ 20.9 $ 25.1 $ - $ 25.1 Outside services $ $ (3.5) $ $ $ (4.5) $ Other $ 65.6 $ (0.2) $ 65.3 $ 79.1 $ (8.8) $ 70.3 Deprecia=on and amor=za=on $ 14.2 $ (14.2) $ - $ 14.4 $ (14.4) $ - Total opera=ng expenses $ $ (29.0) $ $ $ (35.7) $ Nine Months Ended September 24, 2017 Nine Months Ended September 25, 2016 GAAP Adjustments Adjusted GAAP Adjustments Adjusted Compensa=on $ $ (22.3) $ $ $ (36.2) $ Newsprint and ink $ 67.3 $ - $ 67.3 $ 77.2 $ - $ 77.2 Outside services $ $ (7.1) $ $ $ (13.8) $ Other $ $ (4.8) $ $ $ (9.7) $ Deprecia=on and amor=za=on $ 42.0 $ (42.0) $ - $ 42.8 $ (42.8) $ - Total opera=ng expenses $ 1,051.8 $ (76.2) $ $ 1,169.7 $ (102.5) $ 1, / 2018 TRONC, INC. ALL RIGHTS RESERVED

25 Reconciliation of total debt to net debt ($ s in thousands) ReconciliaGon of Total Debt to Net Debt: As of September 24, December 25, December 27, Current por=on of long-term debt $ 21,708 $ 21,617 $ 21,826 Long-term debt 340, , ,847 Total debt 362, , ,673 Less: Cash 185, ,349 40,832 Net debt $ 177,057 $ 172,396 $ 348,841 Net Debt Net Debt is defined as Total Debt less Cash. The Company's management believes that the presenta=on of Net Debt provides useful informa=on to investors as management reviews Net Debt as part of its management of our overall liquidity, financial flexibility, capital structure and leverage. 25 / 2018 TRONC, INC. ALL RIGHTS RESERVED

26 2018 TRONC, INC. ALL RIGHTS RESERVED